Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Mobileye NV (NYSE:MBLY) .
Is Mobileye NV (NYSE:MBLY) worth your attention right now? The smart money is thoroughly getting more optimistic. The number of long hedge fund positions that are disclosed in regulatory 13F filings rose by 5 recently. MBLY was in 30 hedge funds’ portfolios at the end of the third quarter of 2016. There were 25 hedge funds in our database with MBLY positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cna Financial Corp (NYSE:CNA), Western Gas Equity Partners LP (NYSE:WGP), and Varian Medical Systems, Inc. (NYSE:VAR) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s analyze the fresh action regarding Mobileye NV (NYSE:MBLY).
How are hedge funds trading Mobileye NV (NYSE:MBLY)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MBLY over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management holds the number one position in Mobileye NV (NYSE:MBLY). According to regulatory filings, the fund has a $126.7 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Columbus Circle Investors, led by Principal Global Investors, which holds a $56.4 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism encompass Dmitry Balyasny’s Balyasny Asset Management, Philippe Laffont’s Coatue Management and Robert Polak’s Anchor Bolt Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Mobileye NV (NYSE:MBLY). According to its latest 13F filing, the fund had $20 million invested in the company at the end of the quarter. Malcolm Fairbairn’s Ascend Capital also made a $17.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies, and Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mobileye NV (NYSE:MBLY) but similarly valued. These stocks are Cna Financial Corp (NYSE:CNA), Western Gas Equity Partners LP (NYSE:WGP), Varian Medical Systems, Inc. (NYSE:VAR), and Lennar Corporation (NYSE:LEN). All of these stocks’ market caps match MBLY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNA | 18 | 60275 | -3 |
| WGP | 9 | 80527 | 1 |
| VAR | 15 | 187765 | -2 |
| LEN | 48 | 1132322 | 8 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $365 million. That figure was $465 million in MBLY’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Western Gas Equity Partners LP (NYSE:WGP) is the least popular one with only 9 bullish hedge fund positions. Mobileye NV (NYSE:MBLY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LEN might be a better candidate to consider taking a long position in.
Disclosure: none.
